Should Apple get in the mobile phone operator business?
Sitting on many billions of cash, Apple could become a carrier. Get an iPhone and you’re automatically signed up for Apple Wireless. No signing up for AT&T Mobility, T-Mobile, Sprint, Verizon Wireless. Just Apple for hardware, software, and wireless connectivity: a new vertical integration.
Apple could make, buy, or rent a network.
But should it?
A few points for:
- Apple is Faster. As Net Neutrality is quashed in the US, Apple might favor its own content (and those of its friends) over others.
- Apple is more Pervasive. As Apple continues to pervade our lives, bodies, education, work, and health, Apple might innovate a mobile network more ready than rivals for the Internet of Things, wearables, mixed reality interactions, and highly-secure mobile data.
- One Monthly Fee. Apple could bundle connectivity for multiple devices the way other mobile operators bundle a family. But this would include connectivity for your pacemaker, refrigerator, car, running shoes, watch, phone, tablet, eyeware, and utility meter. Simplifying your life, and those of all the vendors who want a slice of it, by providing one billing channel for connectivity (the way Apple did for app and music publishers).
- Apple could rewire the Internet Stack. Our web architecture is inefficient and slow for what we spend. Information scientists like Martin Geddes argue for alternatives that provide more control and speed. Only a company that controlled devices and the network could gain critical mass for the Internet’s next generation.
A few cons:
- Channel Conflict. Apple would be giving up distribution channels orders of magnitude larger than its own store network.
- Opportunity Costs. Apple would be tying up capital it could use to do other things.
- Undifferentiated. Apple doesn’t have any capabilities that would let it offer better service, experiences, or rates. Could it build or buy them?
- Oversight. Apple would be entering a business more highly regulated than any (except healthcare). Without the decades of D.C. lobbying experience and connections existing telcos wield, Apple would be vulnerable.
- Big Brother. Apple has been privacy positive but carriers must give up personal data to law enforcement, spy agencies, and other government agencies. Would this dissonate your ideas of Apple’s identity?
- Unwalled. Carrier lock-in is anticompetitive (see the Carterfone ruling) so the Apple wireless service would be open to all.
- USA Last. Should Apple decide to become a mobile phone company (or buy one), is the USA the first place in the world to start? Why not a higher growth and impact country in Africa or Asia?
- Overwhelm Coming. Mobile operators are about to be demand-stressed by 4K video streaming and IoT growth. Why should Apple dive into Telecom just as inability to meet demand will harm customer relationships and satisfaction? There is no cheap way build out wireless infrastructure and backhaul to keep up with demand.
It might be interesting to see Apple try, but I’d advise the leadership team to skip it.